A contrarian blog, because the majority is wrong about a lot of stuff.

December 21, 2012

Taxes are going up; should you worry?

Because of the breakdown in the “fiscal cliff” talks (what a dumb name), everyone’s taxes might go up. Should you be worried?

The general answer is no, in the long run this won’t hurt your standard of living. And that’s because, after necessities like basic food, shelter and healthcare (which will soon be provided by Obamacare), all of our wants are positional wants rather than absolute wants. Everything we think we want is based on what others have and want, and furthermore the costs of many positional goods, including the cost of housing in a neighborhood safe from NAMs and low proles, are based on what people can afford to spend rather than some absolute value.

Of course all changes in policy will benefit some people and adversely impact others. I would say that tax increases hurt homeowners and benefit renters. They benefit people who have a secure job and hurt the unemployed and those who might be fired because of the temporary reduction in economic activity which follows tax hikes. The especially significant increase in estate taxes will hurt the heirs of people with a net worth of more than $1 million who failed to engage in good pre-tax-increase estate planning.

27 Comments

But not everyone pays taxes. Those who do not still get food, health care and shelter, which are in finite supply. Those who do pay will have less dollars to pay for those goods, which are still affected by the demand of those who do not pay.

Because they're income taxes, they tend to benefit the wealthy (people who have large asset stakes relative to their income) relative to prosperous (pick a term for people with high wage incomes but few/no assets). Yet another reason so many of the wealthy (those with high assets) are pro tax increases they make it harder for the prosperous to compete for the wealth status.

[HS: There will be an increase in capital gains tax, dividends, and on estate taxes, all of which are taxes which hit the wealthy with assets harder. Rich who favor tax increases do so out of altruism or because Republicans are pro-gun loons who believe in creationism, rather than some secret plan to benefit themselves.]

"As a college student with a part time job, I am going to feel the $425."

Earlier this year, a grad student from Washington State called into a conservative S.F. radio show and said he was getting $650/mo. in food stamps/EBT, with no qualification whatsoever. Go for it. From here on in it's socialism all the way.

"all of our wants are positional wants rather than absolute wants. Everything we think we want is based on what others have and want, and furthermore the costs of many positional goods, including the cost of housing in a neighborhood safe from NAMs and low proles, are based on what people can afford to spend rather than some absolute value."

This is possibly true over the long run. Our mortgage is the same, the girl's ballet lessons cost the same & etc... So if we pay more in taxes, we have less money at the end of the month. We will feel it. Not that Democrats will ever get our vote, or that it matters living in MA.

There will be an increase in capital gains tax, dividends, and on estate taxes, all of which are taxes which hit the wealthy with assets harder.

No, they will not. The wealthy with assets will not pay significantly higher taxes. This has been shown over and over and over again. The estate tax especially will not hit the truly wealthy. The people who are going to get hit the worst by this are the almost-wealthy or the potentially-wealthy.

HS: There will be an increase in capital gains tax, dividends, and on estate taxes, all of which are taxes which hit the wealthy with assets harder.

Here's an example of a rich man's trade. In March of 2008, Warren Buffett (Berkshire) swapped a stake in White Mountain Insurance for $750 million and two failed insurance firms (they were in run off). If he paid $300 million for that stake in 2001, how much capital gains tax did he pay or how much will he be impacted by an increase in the rate?

The answer, of course, is $0 to both questions. Because he bought two failing insurance firms, the sale is considered a tax free swap so he gets liquid cash and has no capital gains tax. Keep in mind that the 15% tax rate was all that would have applied (and even that was too high for him to tolerate).

You are far too naive about the motives of the asset rich. Unless you have some tricky ways of getting income that rival Buffett's tax free swap, I'd highly reccomend watching how business typically works before blindly deciding that because rates will rise together everyone will be impacted in a similar manner, because that's very incorrect. Anthter more common one, many asset rich don't sell their assets because it's trivial to borrow at exceedingly low rates against the asset and greatly defer any tax consequences.

I haven't rad NRA's announcement, but it's probably a mild-mannered and reasonable stating of facts as they see them.

Meanwhile, photos with protesters carrying libelous signs "NRA has blood on its hands" get plastered all over the internet.

So, what does NRA (or any non-liberal organization that's under attack) gain by being mild and reasonable? Ask nice losers Paul Ryan and Mitt Romney. Or even teh Catholic Church, which made epic concessions to liberalism wiht Vatican II, only to have headlines today state "The Pope's homophobia problem."

The NRA could have delivered a thunderous statement in which they slam the libel-mongers and refuse to be scapegoated for a deranged mass murderer and the liberal culture that enabled him.

"and furthermore the costs of many positional goods, including the cost of housing in a neighborhood safe from NAMs and low proles,"

The more progressive the tax code the more the after-tax income of upper class people will equalize to lower class people. At the limit a 100% tax and redistribution rate will assure that everyone, from the ghetto thugs to brain surgeons have the same income.

The closer upper class people's income moves to lower class the more upper class people will live in the vicinity of lower class people. Once again at the limit if upper-class people are orders of magnitude wealthier than lower-class people they will be completely segregated.

An upper class suffers a lot more from living next to a lower class person than another lower class person. For one proles generally like other proles, while SWPLs are disgusted by their culture. If you force a prole to live next to a SWPL, the prole will at best benefit marginally from his new cultural exposure. The SWPL on the other hand will detest his redneck neighbors.

Second a person who grew up poor is much more likely to be "street smart" and know how to avoid being a victim of crime. This is why attempts to move ghetto NAMs into upper-class white neighborhoods is a crime disaster. It's like introducing super-predators into a ecosystem where the prey doesn't have any previous predation. Lower class prey is much better adapted to the lower class predators. Ostriches can avoid lions, emus cannot.

From this perspective socio-economic segregation is "value-creating" to use your terminology. When upper class people have the disposable income to live apart from lower class people many more people are happier. Some lower-class people will be unhappy from being shut off from upper-class society. But overall they will only be slightly unhappy because they're street smart enough to know how to live around other poor people.

If you live in a country where the lower classes are actually socially civilized, like Japan, then social and economic equality is probably a positive thing. But if you live in a country like the US where the lower classes have been turned into barbaric animals than economic equality is a very bad thing because it throws lambs into the lion den.

Money is simply a method of transferring the time to complete one activity for another. Government spending simply transfers a portion of spending from the population at large to the representative population. If the spending equals the amount taxed, it's a wash. If the spending exceeds the amount taken in, it's okay if it's for infrastructure that benefits future generations, if it's for mexicans to send home or troops to defend Europe, it's bad because it in essence steals time from future generations.

If the people are good, they elect a government that doesn't steal from future generations. If the people are bad, they do. The people today are very very bad and deserve any and all bad things that happen to them.

"The general answer is no, in the long run this won’t hurt your standard of living. And that’s because, after necessities like basic food, shelter and healthcare (which will soon be provided by Obamacare)..."

False. If you think the Federal Government pays out to white people as readily as they do to minorities you're kidding yourself. Obama hasn't given *me* a free phone, isn't giving me unemployment, food stamps, housing assistance, etc. These things are only for the anointed colored ones.

My theory is that you don't like you're expensive camera -- buyer's remorse. So you justify it in your mind as a positional good and expand that concept out to others, assuming that they think the same as you.

Need I point the obvious. Say taxes go up by 5% both on income and on capital gains. At the top, this vastly favors the already wealthy people with lots of investments, the business people and executives paid in shares/options and it relatively disadvantages the professionals (doctors, lawyers, etc) The first group makes most money through cap gains while the second through regular income. The reason is that you pay tax on regular income every year, and you only pay long term cap gains when you flip the assets. A business owner or executive that has his worth in shares/options all he needs to do is hold them until he needs the money. So his wealth will accumulate on paper. On the other hand most professionals have no choice buy to pay Obama taxes. In return this makes the top top wealthy group an even more stable group, since the newcomers are paying higher taxes to get there.

If you live in a country where the lower classes are actually socially civilized, like Japan, then social and economic equality is probably a positive thing. But if you live in a country like the US where the lower classes have been turned into barbaric animals than economic equality is a very bad thing because it throws lambs into the lion den.

Explain one thing to me: aren´t these savages locked up? I thought that the USA became a police state where you can spend time in prison for the silliest things and with the biggest prison populaiton in the world.

In Brasil, I can´t imagine someone being arrested for smoking pot, loitering or using prostitutes. Well, that i because we are among the 5 biggest prison populations in the world and we simply can´t afford to keep more of them in cages.

St. Louis University School of Law's interim dean Tom Keefe Jr. talked this week with The Madison-St. Clair Record about "this terrible problem with student debt."

Keefe, who does double duty as a plaintiffs' lawyer and called himself "unconventional" during the interview, suggested cutting law school curriculum down to two years to save students money.

He took over control of SLU law this semester after former dean Anette Clark penned a very public resignation letter attacking the university's president for using the law school's money to keep the entire university afloat and for leaving her out of big decisions.

While it might seem strange for a law school dean to suggest such a drastic change that would take money away from the school, Keefe isn't alone in wanting to slash the third year of law school.

New York University Law completely revamped its third year of law school and now allows students to study abroad during their third year.

Stanford Law School has also overhauled its third year and now allows students to pursue joint degrees, The New York Times reported in October.

Salaries are a major factor, with some law professors at elite or large law schools earning in excess of $350,000 to $400,000 annually. These sums significantly outpace other legal remuneration, except for the 10% in the upper ranks at top law firms.

One solution, he says, is for professors to teach more courses each academic year to cut back on law school salary budgets. Other schools could rely more on part-time professors and offer two-year degrees to shave the overall tuition bill.